From Transfers to Capital: Analyzing the Spanish Demand for Wealth Using NTA
Miguel Sanchez Romero, Max Planck Institute for Demographic Research
Concepcion Patxot, Universitat de Barcelona
Elisenda Renteria, Universitat de Barcelona
Guadalupe Souto, Universitat Autònoma de Barcelona
Inter- and intra-family transfers are a very important part of our daily economic activity. These transfers, whether familial or public, may influence our economic decisions to the same extent that financial markets do. In this paper, we seek to understand how the Spanish stock of capital will evolve if the set of intergenerational transfers observed in the year 2000 is maintained in the future. With that aim in mind, we have implemented a general equilibrium overlapping generations model with realistic public and familial transfers drawn from the National Transfer Accounts project (NTA). Given that familial transfers go from parents to children, and public transfers go from children to parents, we show that the Spanish baby boom and baby bust will make the second demographic dividend temporary, and that welfare will be reduced from 2040 onwards.